Illuminating Economic Growth Using Satellite Images – IMF F&D
Source details
- Canonical URL
- Illuminating Economic Growth Using Satellite Images – IMF F&D
Other formats
Bibliographic details
- Authors: JIAXIONG YAO
- Published: September 1, 2019
Overview of night lights as economic data
- Satellite "night lights" images have been used to study human activity and natural events for almost 30 years.
- Economists have used night lights in the past decade to gauge economic growth, map poverty, analyze inequality, and answer questions where conventional data are lacking.
- Each pixel represents an area of less than one square kilometer and is associated with a digital number measuring brightness at night; aggregating pixel values for a country produces an indicator of that country's night-time activity over time.
How night lights reflect the changing economy
- Night lights capture two broad aspects:
- Spatial expansion or contraction: in growing economies more areas are lit and more pixels record light; in regions affected by conflict more patches go dark and pixels lose light.
- Intensification: urbanization, city agglomeration, and infrastructure modernization increase brightness per pixel.
- Empirical relationships:
- Rich countries are generally brighter than less developed countries, with notable exceptions (e.g., Nordic countries are among the brightest per capita; Japan appears scarcely brighter than pre–Arab Spring Syria, likely due to energy conservation habits and high population density).
- When accounting for country-specific characteristics of night lights, a transition emerges: early development emphasizes physical capital (infrastructure that emits light at night); advanced economies rely more on scientific and technological innovation, where night lights grow only about half as fast as GDP in advanced economies.
Use of night lights where official statistics are weak
- Night lights can reestimate GDP for conflict-stricken countries by comparison with countries at various development stages.
- Findings from such reestimation:
- Night-light-based GDP measures often indicate faster economic deterioration during conflict than official data show.
- Night-light-based measures also suggest a stronger bounce-back after conflict ends.
- The informal economy likely contributes to postconflict dynamics observed in night-light measures.
Data scale and technological implications
- Data scale described in the source:
- An individual country such as the United States can consist of hundreds of millions of data points when each pixel is treated as a data point.
- With more than 200 countries and regions, the Earth's land surface contains almost a billion data points for a single early satellite image of very coarse resolution.
- The number of data points would grow exponentially with more frequent releases and ever-finer resolution images; there are already hundreds of them taken in the past and many more to be taken in the future.
- Night lights have been illuminating the Earth for more than a century.
- Opportunities from big geospatial data:
- Advances in data science, including machine learning, can analyze patterns to support decision-making.
- Granular satellite data can be harnessed to study local effects, spatial spillovers, and remote economic activity where ground information is scarce.
- Private firms (examples cited in the source: DigitalGlobe and Orbital Insight) already apply data-science techniques to such imagery.
Conclusions and policy implications
- Night lights provide a valuable complementary indicator of economic activity, especially where conventional statistics are lacking or unreliable.
- Policy-relevant implications highlighted:
- Use night-light data to improve monitoring of economic deterioration and recovery in conflict-affected areas.
- Leverage machine learning and other data-science methods to extract actionable insights from expanding satellite and geospatial datasets.
- Seize the opportunities of big data to guide smarter policies that improve understanding of the economy and support development objectives.
- The author emphasizes that as we enter the age of big data, opportunities abound and should be harnessed to make "this world a better and brighter place."
JIAXIONG YAO, F&D Magazine, September 2019.
Content in this bundle
- أضواء النمو الاقتصادي
- La luminosidad del crecimiento económico ● Finanzas y Desarrollo ● Septiembre de 2019
- Lumière sur la croissance économique
- Освещая экономический рост – Финансы и развитие – сентябрь 2019 года
- Illuminating Economic Growth Using Satellite Images – IMF F&D
- 点亮经济增长 - 《金融与发展》2019年9月号·第56卷·第3期 - 国际货币基金组织季刊